Scaremongering Guardian articles and some post's about hard brexit and lack of preparations for brexit this might be useful and it's from the Department for Exiting the European Union.
The European Union (Withdrawal) Act and financial services
contingency preparations
1.8 While the government has every confidence that a deal will be reached and the implementation period will be in place, it has a duty to plan for all eventualities, including a ‘no deal’ scenario. The government is clear that this scenario is in neither the UK’s nor the EU’s interest, and we do not anticipate it arising. To prepare for this unlikely eventuality, HM Treasury intends to use powers in the European Union (Withdrawal) Act (EUWA) to ensure that the UK continues to have a functioning financial services regulatory regime in all scenarios.
1.9 The EUWA repeals the European Communities Act 1972 and converts into UK domestic law the existing body of directly applicable EU law (including EU Regulations). It also preserves UK laws relating to EU membership – e.g. legislation implementing EU Directives. This body of law is referred to as “retained EU law”.3 The EUWA also gives ministers powers to prevent, remedy or mitigate any failure of EU law to operate effectively, or any other deficiency in retained EU law, through SIs. We sometimes refer to these contingency preparations for financial services legislation as ‘onshoring’. These SIs are not intended to make policy changes, other than to reflect the UK’s new position outside the EU, and to smooth the transition to this situation. The scope of the power is drafted to reflect this purpose and is subject to further restrictions, such as the inability to use the power to impose or increase taxation, or establish a public authority.4 The power is also time-limited and falls away two years after exit day.5
1.10 HM Treasury also plans to delegate powers to the UK’s financial services regulators to address deficiencies in the regulators’ rulebooks arising as a result of exit, and to the EU Binding Technical Standards (BTS) that will become part of UK law. Such sub-delegated powers will be subject to broadly the same constraints as HM Treasury’s use of the Act’s powers, as well as additional mechanisms to ensure robust HM Treasury oversight. An SI to achieve this will be laid
2 Procedures for the Approval and Implementation of EU Exit Agreements: Written statement - HCWS342, Mr David Davis (Secretary of State for Exiting the European Union), December 2017. www.parliament.uk/business/publications/written-questions-answers-statements/written- statement/Commons/2017-12-13/HCWS342/
3 Paragraph 23 of the Explanatory Notes on the European Union (Withdrawal) Act 2018 (c.16) for a definition of “retained EU law”, and Section 8 for an explanation of the deficiency fixing power. www.legislation.gov.uk/ukpga/2018/16/pdfs/ukpgaen_20180016_en.pdf
4 Outlined in Clause 8(7) of the European Union (Withdrawal) Act 2018 (c.16). www.legislation.gov.uk/ukpga/2018/16/pdfs/ukpga_20180016_en.pdf 5 Outlined in Clause 8(8) of the European Union (Withdrawal) Act 2018 (c.16). www.legislation.gov.uk/ukpga/2018/16/pdfs/ukpga_20180016_en.pdf
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before Parliament now that the EUWA has received Royal Assent.6 Further information on regulatory changes to BTS and regulators’ rules for EU exit will be provided by the financial services regulators in due course.7
1.11 The government is continuing this work to ensure that the UK will have a functioning legislative and regulatory framework in all scenarios. As part of this, HM Treasury intends to legislate to provide the financial services regulators with powers to introduce transitional measures that they could use to phase in any onshoring changes.
1.12 This means that firms do not need to prepare now to implement onshoring changes in the event no deal is reached with the EU.
1.13 Firms should continue to plan on the assumption that an implementation period will be in place from 29 March 2019 – and, therefore, that they will be able to trade on the same terms that they do now until December 2020. They will need to comply with any new EU legislation that becomes applicable during this period.
1.14 HM Treasury, working closely with the financial services regulators, has undertaken a thorough review of EU and UK domestic financial services legislation to identify deficiencies that will arise when the UK leaves the EU and existing EU law is transferred to UK law. HM Treasury is drafting SIs to fix these deficiencies and will begin laying these under the EUWA.
1.15 Wherever practicable, our approach is that the same laws and rules that are currently in place in the UK would continue to apply at the point of exit, providing continuity and certainty as we leave the EU. However, some changes would be required to reflect the UK’s new position outside the EU. These changes would not take effect in 29 March 2019 if, as expected, we enter an implementation period.
1.16 Examples of deficiencies in financial services legislation include:
•Functions that are currently carried out by EU authorities would no longer apply to the UK (for example, supervision of trade repositories, which HM Treasury proposes to transfer to the Financial Conduct Authority);
•Provisions in retained EU law that would become redundant (for example, references to European Consumer Credit Information and Member States);
•Provisions that would be inconsistent with ensuring a functioning regulatory framework – for example, requirements regarding automatic recognition of an action by an EU body by the relevant UK body – where alternative arrangements for cooperating with EU bodies would be more appropriate;
6 Draft Statutory Instruments: 2018 No. Exiting the European Union, Financial Services, Financial Regulators’ Powers (Technical Standards) (Amendment etc.) (EU Exit) Regulations 2018. assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/701834/draft_Financial_Regulators__Powers__Technical Standards_Regulations.pdf
And see Covering note on the Financial Regulators’ Powers (Technical Standards) (Amendment etc.) (EU Exit) Regulations 2018. assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/700713/Covering_note_for_draft_Financial_Technical_St andards_SI.pdf
7 FCA Role Preparing for Brexit, Financial Conduct Authority, June 2018. www.fca.org.uk/news/statements/fca-role-preparing-for-brexit
Bank of England’s approach to financial services under the EU Withdrawal Act, June 2018. www.bankofengland.co.uk/news/2018/june/boes-approach- to-financial-services-legislation-under-the-eu-withdrawal-act
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•Provisions that would lead to significant disruption for firms or customers of firms, unless action is taken to avoid that disruption (for example, to prevent the market disruption that would result from the sudden inoperability of passporting rights);
•Provisions requiring participation in EU institutions, bodies, offices and agencies (for example, joint decision making in supervisory and resolution colleges) which would no longer work after exit.
HM Treasury’s approach to fixing deficiencies
1.17 In the unlikely scenario that the UK leaves the EU without a deal, the UK would be outside the EU’s framework for financial services. The UK’s position in relation to the EU would be determined by the default Member State and EU rules that apply to third countries at the relevant time. The European Commission has confirmed that this would be the case.8
1.18 In light of this, our approach in this scenario cannot and does not rely on any new, specific arrangements being in place between the UK and the EU. As a general principle, the UK would also need to default to treating EU Member States largely as it does other third countries, although there are instances where we would need to diverge from this approach, including to provide for a smooth transition to the new circumstances. The principles that would lead to deviations from this approach are set out below.
1.19 In some areas, correcting deficiencies to reflect this environment would be relatively straightforward. The UK’s world-leading financial sector is overseen by HM Treasury and underpinned by a strong legislative framework with world-class regulators (the Bank of England/Prudential Regulation Authority and Financial Conduct Authority). This means that the responsibilities of EU bodies could be re-assigned efficiently and effectively, providing firms, funds and their customers with confidence after exit.
1.20 In this scenario, EU financial services firms operating in the UK would broadly become subject to the same supervisory regime that the UK already applies to other third countries – a regime that is shaped by the highly global, cross-border nature of financial services and the UK's robust regulatory framework as set out in legislation, including in the Financial Services and Markets Act 2000 (FSMA), the Banking Act 2009 and the Bank of England Act 1998. This existing UK financial services legislative framework provides powers for extensive cooperation with global regulatory bodies. When the UK is no longer an EU Member State, and so the EU obligation of reciprocal cooperation no longer applies, this existing framework could be relied upon to ensure this important cooperation continues in this scenario.
1.21 HM Treasury recognises that in some areas, given the complex and highly integrated nature of the EU financial services system, deficiencies would not be adequately resolved by defaulting to existing third country frameworks alone. In such cases, a different approach might be needed to manage the transition to a stand-alone UK regime. HM Treasury has identified several principles that would justify taking a different approach:
• Having a functioning legislative and regulatory regime in place, in particular the regulators’ capability to fulfil their statutory objectives as set out in FSMA;
8 Withdrawal of the United Kingdom and EU rules in the field of banking and finance, Directorate‐General for Financial Stability, Financial Services and Capital Markets Union (European Commission), February 2018. ec.europa.eu/info/publications/180208-notices-stakeholders-withdrawal-uk-banking-and- finance_en
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•Enabling regulators and firms to be ready – by minimising disruption and avoiding material unintended consequences for the continuity of service provision to UK customers, investors and the market;
•Protecting the existing rights of UK consumers;
•Ensuring financial stability.
1.22 For example, recognising the need to provide for continuity and to allow time to prepare for a smooth transition to the new regime, it would be appropriate for HM Treasury to introduce a Temporary Permissions Regime (TPR), in line with the announcement made in December 2017. To deal with the loss of their passporting rights on the UK’s exit from the EU without a negotiated agreement, the TPR would allow EEA firms to continue operating in the UK for a time-limited period after the UK has left the EU. For those firms wishing to maintain their UK business on a permanent basis, the regime would provide sufficient time to apply for full authorisation from UK regulators. 9
1.23 In addition to the TPR, HM Treasury intends to introduce further specific transitional regimes for entities operating cross-border and outside of the passporting framework. This is part of onshoring planning to maximise certainty and continuity for firms and consumers. HM Treasury is aware that firms would need time to adjust to this changed regulatory regime in the unlikely event it is needed, and therefore intends to provide the financial services regulators with a general power to phase in post-exit requirements, allowing flexibility for firms to transition to a fully domestic UK regulatory framework.
All cut and paste.
